Will there be another Black Monday?

No one saw it coming. That’s why it’s called Black.

On October 19, 1987, the blackest of Black Monday’s, I was a copywriter on the Merrill Lynch account. The whole team pulled an all-nighter preparing a script for Merrill Lynch Chairman of the Board and CEO William A. Schreyer. The essence of the final messaging was that Merrill Lynch was still bullish on America even after the Dow Jones Industrial Average suffered it’s single largest percentage loss day of 22.61%. For the time being, he was right. By the end of the year, total returns, including dividends, came in with about a 5% gain. In the below interview with Louis Rukeyser, he equated it to a “total eclipse of the sun.”

There have have actually been three Black Mondays in the stock market, but here’s the good news: they all occurred in October and none of them came announced. Well, it’s not October and the recent events couldn’t be more “announced.” Black strikes when least expected.

The bad news is that they all happened when politicians and bankers were trying to make assurances that the market was sound. John Kenneth Galbraith’s “The Great Crash 1929” is a great read if you can grit it out. One bit you’ll take away about the 1929 crash was that politicians and bankers were saying “the economy is sound.” And in various shapes, iterations, and subtle inuations, that is happening now.

Whether you agree or disagree with the S&P downgrade or not, one thing is for sure. The U.S. debt is the world’s benchmark debt. It has never been downgraded before. So it seems like anyone who claims to know what they are talking about is probably making it up.

What do you think? Could there be another Black Monday? Or does it just feel like there could be?